Falling oil prices take UK inflation to record low
Falling oil prices lead to falling costs. Has your firm benefitted?
The fate of many builders’ merchants isn’t only dependent on your own efforts, but also on wider economic conditions – as we saw during the recession. One of the key factors in the state of the economy is the price of oil. Until recently, oil prices had remained reasonably stable, but in recent months they have tumbled to under $50 per barrel.
This has led to a significant decrease in UK inflation, as retailers pass on a proportion of their lower costs to consumers, in the form of lower prices. The CPI now stands at 0.5% – the joint-lowest rate of inflation since the metric was first introduced in 1989. There are fears that the UK could soon head into deflation – a move that could cripple the UK’s economy if it were prolonged.
For builders’ merchants, the fall in oil prices has certainly been welcome. Lower delivery and transportation costs have reduced cashflow pressure and freed up funds for expansion, marketing and other processes.
However, retailers must be cautious in carrying out plans on the back of lower oil prices. We’ve seen in the past how volatile the market can be, and it appears that a prolonged, stable period of low prices is required to truly boost business.
Retail and point-of-sale software becomes even more important during times of rapidly changing costs. Keep a close eye on your ever-changing finances with Trader, an accounts and point-of-sale software package built for merchants like you.
